Saw a picture of lines in Lagos to buy LAKE rice….(ie LAgos KEbbi) locally milled rice. Why the lines? LAKE Rice is subsidized so cheaper, thus demand is higher, thus lines.
So to be clear, Lagos and Kebbi States are subsidizing the market price of LAKE rice….to make it “affordable” Good idea? . Is subsidizing local production good economics Yes If it creates local jobs, reduces imports, raises state revenues etc…..but local production ONLY works if the local rice is able to compete with imported rice. So can LAKE rice compete with imported rice ?
Simple answer is No
Why? LAKE rice CANNOT compete YET because its output is insufficient. Local milled rice cannot meet local demand. In effect, subsidizing the selling price of LAKE rice is an inefficient use of public funds because the problem is not price of local rice but output of local rice. To drop prices, the end goal of LAKE rice should be to replace imported rice…this is ONLY achieved by gaining market share through boosting output.
Price reduction gains market share…but even if LAKE rice got a exclusive market licence in Lagos, it cant satisfy demand. So focus on boosting output. Thus Lagos State is better served by investing in rice milling in Kebbi as other rice states and signing exclusive offtake agreements for local rice. Once locally milled output rises, local prices will drop and imports fall. Rice queues will disappear.
Take funds used to subsidize selling prices & invest in local rice value chain of milling, storage, logistics etc Have a 5 year plan..it will happen.
